Senate Panel Hears From Hampton Roads

July 24, 2013

(NEWPORT NEWS DAILY PRESS 23 JUL 13) … Hugh Lessig

A Virginia Beach defense contractor implored a Senate panel Tuesday to put aside partisan differences and find a more sensible way to control defense spending, saying the current process is creating waste, not savings.

Mark N. Klett, the president and CEO of Klett Consulting Group, said he has struggled with the uneven work flow and uncertainty the past two years, the most difficult stretch he’s seen since establishing his firm in 2002.

And he had a suggestion: Good business, he said, is all about establishing relationships with other people.

“Work on your relationships with both sides, with the House, to get things done,” he said.

But the discussion that ensued on the Senate Budget Committee showed just how difficult a solution might be. Sen. Mark R. Warner called for a broad mix of changes in taxes and entitlement programs, as well as targeted spending cuts. The automatic spending cuts under sequestration are nothing more than “stupidity on steroids,” he said.

But Sen. Jeff Sessions, R-Ala, blamed President Obama for not instructing the Defense Department to plan for sequestration.

“I’m beginning to wonder if the president wants to see the Defense Department take these cuts, because he hasn’t been showing leadership,” he said.

That brought a comeback from Warner’s fellow Virginian, Sen. Tim Kaine, who said the blame rests squarely with Congress. He said the president “cannot make an ill-behaved Congress behave.”

Worse Times Ahead?

The two sides did agree on one thing: 2014 may be worse than 2013 if nothing changes. And that’s not good news for Klett or other small to medium-sized defense contractors.

His company provides technical solutions and other services to a wide variety of clients. It has worked on the next-generation aircraft carrier Gerald R. Ford now under construction at Newport News Shipbuilding, and was involved in work related to President Obama’s call to improve cyber security at federal agencies.

But uneven funding has played havoc with work schedules and contracts, Klett said. He’s seen gaps of two weeks to one month on contracts, and the “herky-jerky” schedule has caused groups workers to sit idle.

“Who pays for those folks to sit on the bench? We do,” he said, “and I gladly pay that because they have bills to pay. You have to maintain your people and your core capabilities.”

The uncertainty is especially difficult for small businesses..

“No one can plan beyond 30 September 2013, he said. “The impact will be even greater on subcontractors who lack the capital structure to withstand uncertainty. Sixty to 70 percent of defense dollars are subcontracted…”

Wittman Concerned

Also Tuesday, Rep. Rob Wittman, R-Westmoreland, held a closed-door briefing with defense officials to discuss budget cuts. Wittman chairs the readiness panel of the House Armed Services Committee.

Wittman agreed that next year will be worse than this year if more automatic cuts go into effect.

“It’s not a pretty picture,” he said. “I think readiness will be significantly impacted, and the impact on our service branches is absolutely unacceptable.”

Like his Senate counterparts, he was interested in the impact of defense civilian furloughs. That idea that furloughs may breed inefficiency is definitely a concern, Wittman said.

“Much of the work that is being forestalled is going to have to be done,” he said. “So in the future when furloughs are set aside, you’ll have to catch up on this work. Does it result in long-term costs that eat up short-term savings? That is a distinct possibility across the board, although it’s hard to tell right now.”